Disappointing economic news from the US sent London's FTSE 100 Index into the red yesterday after a poor final session for blue chip stocks.
Early falls on Wall Street saw a late session turn for the worse on the Footsie, which closed down more than 1 per cent with a fall of 44.82 points to 4249.21.
Figures showing an unexpected dip in US consumer confidence sparked the sell-off on bot
h sides of the Atlantic.
The surprise drop, raising doubts about the speed of an economic recovery, and falling oil prices sank energy shares in the US.
The Conference Board's US consumer confidence index fell in June, versus expectations of an increase, sparking investor concern about how quickly consumers will resume spending
There was also bad news on the economy on these shores, after revised figures revealed a 2.4 per cent slump in first quarter GDP – the worst rate since 1958.
The downward revisions also showed that the recession is steeper and longer than first thought, seen as a potential blow to recovery hopes.
The FTSE 100 has rallied from its lows in March, but still remains below its opening mark for the year as worries over the pace of economic recovery have caused a stuttering performance during recent weeks.
Dampened economic hopes saw miners hit hardest in afternoon trade on the back of sharply lower commodity prices. Randgold Resources led the way, down 127p to 3924p.
Standard Chartered was also among the heavy fallers, down 35p to 1140p, bucking the trend seen by rivals such as Barclays, which added 33/8p to 283p.
BA was another stock in the red with a 23/4p fall to 1243/4p as reports suggested crucial talks with unions aimed at reaching agreement on cost cutting were heading for a breakdown. But much of yesterday's session was focused on the transport sector after Arriva warned revenues from its CrossCountry franchise were under pressure.
Shares fell 4 per cent, or 16p, to 406p, but in contrast shares in National Express saw another 2 per cent rise, up 63/4p to 3091/2p, after FirstGroup confirmed on Monday its takeover interest in the rail and coach operator.
The housebuilding sector was given a lift after the Nationwide said prices rose for the third time in four months during June.
This was enough to lift Taylor Wimpey by 1/4p to 331/2p and Barratt Developments by 1/2p to 1471/2p.
Carpetright failed to benefit from the better consumer sentiment as the floor coverings firm reported annual results at the bottom of market expectations.
Shares declined by 37p to 561p after the company also revealed a sharp cut in its full-year dividend.
Directories firm Yell was the biggest faller in the FTSE 250 Index after it forecast another grim quarter of trading and said that it was in talks with lenders about refinancing its £3.5bn debt pile.
There were no details on the plans, but the City was pessimistic about the potential impact on investors as shares tumbled 15 per cent, or 41/2p, to 261/4p.
Also in the second tier, retail chain HMV saw shares fall 6p to 1123/4p despite reporting pre- tax profits for the year to April 25 up 11.5 per cent at £63m, slightly ahead of consensus forecasts.
The biggest Footsie risers were Wolseley up 32p to 1158p, Thomas Cook ahead 55/8p to 2051/2p, Icap up 11p to 451p and Amec ahead by 13p to 653p.
The biggest Footsie fallers of the day were Randgold Resources, and Schroders off 26p to 8201/2p.
